Working Paper: CEPR ID: DP17869
Authors: Marc Rysman; Robert Townsend; Christoph Walsh
Abstract: The effect of financial crises on bank branch location choices provides an unexplored channel by which crises affect access to credit for many years. We estimate a dynamic structural model of oligopolistic location choice for Thai banks allowing for competitive effects between rival banks. We predict the evolution of branch locations under the counterfactual scenario of no financial crisis in 1997. We find that there would have been 18.5% more branches and 9.3% more markets with at least one branch after ten years in the absence of the crisis. Furthermore, access to loans would have increased by 8.0 percentage points.
Keywords: banking; dynamic oligopoly; financial access
JEL Codes: D43; G21; L13; L80
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| branch support subsidies (H23) | total number of branches (C39) |
| branch support subsidies (H23) | market coverage (M31) |
| 1997 financial crisis (F65) | reduction in branch expansion (C34) |
| 1997 financial crisis (F65) | access to loans (G21) |
| 1997 financial crisis (F65) | banks' profits (G21) |
| local demand (R22) | branching decisions (D91) |
| 1997 financial crisis (F65) | reduced branch openings (G24) |
| 1997 financial crisis (F65) | increased closures (J65) |